1984 (2) TMI 134 - AT - Income Tax

Issues Involved:
1. Inclusion of HUF property value in the principal estate.
2. Applicability of Sections 9, 10, 13, and 29 of the Estate Duty Act.
3. Competence of the deceased to dispose of the entire property.
4. Applicability of Section 6 of the Estate Duty Act.
5. Applicability of Section 27 of the Estate Duty Act.
6. Applicability of Section 10 of the Estate Duty Act.
7. Applicability of Section 13 of the Estate Duty Act.

Detailed Analysis:

1. Inclusion of HUF Property Value in the Principal Estate:
The primary issue was whether the value of the HUF property, amounting to Rs. 4,57,685, should be included in the principal estate of the deceased, Shri Ambalal B. Patel. The Assistant Controller initially included this amount in the estate's principal value, but the Appellate Controller directed only the inclusion of one-sixth of this amount, representing the deceased's share, amounting to Rs. 76,281, and Rs. 3,05,123 for rate purposes.

2. Applicability of Sections 9, 10, 13, and 29 of the Estate Duty Act:
The Appellate Controller held that Sections 9, 10, and 13 were not applicable as the transfer of property to the family hotchpot occurred more than two years before the death, and there was no gift involved. Section 29, which pertains to unequal partition, was also deemed irrelevant.

3. Competence of the Deceased to Dispose of the Entire Property:
Shri Alphonso argued that the deceased, as the karta of the HUF, had the power to dispose of the entire property, suggesting that the entire property value should be included in the estate under Section 6 of the Act. However, it was countered that the deceased's power was limited to his share only, considering the coparcener's right to demand partition.

4. Applicability of Section 6 of the Estate Duty Act:
The Tribunal found that Section 6 was not applicable because the deceased did not have full power of disposition over the entire property due to the coparcener's rights. The deceased could only dispose of his one-sixth share.

5. Applicability of Section 27 of the Estate Duty Act:
Shri Alphonso argued that the act of throwing self-acquired property into the family hotchpot constituted a disposition in favor of relatives, making it a gift under Section 27. However, the Tribunal noted that even if it was considered a gift, it was made more than two years before the death, thus not includible under Section 9.

6. Applicability of Section 10 of the Estate Duty Act:
Shri Alphonso contended that the deceased was not wholly excluded from the possession and enjoyment of the property, thus invoking Section 10. The Tribunal, referencing the Supreme Court decision in CED v. Kamlavati, held that the possession and enjoyment of the property by the deceased as a member of the HUF did not constitute a gift, making Section 10 inapplicable.

7. Applicability of Section 13 of the Estate Duty Act:
Shri Alphonso argued that Section 13, which deals with joint investments, was applicable. However, the Tribunal found that the joint investment referred to in Section 13 did not apply to the case of coparcenary property. The unilateral act of throwing property into the family hotchpot did not constitute a joint investment.

Conclusion:
The Tribunal upheld the Appellate Controller's decision, dismissing the appeal. The value of Rs. 4,57,685 was not to be included in the principal estate, and only the deceased's one-sixth share amounting to Rs. 76,281 was includible, along with Rs. 3,05,123 for rate purposes. The Tribunal found no merit in the applicability of Sections 6, 9, 10, 13, and 27 as argued by the department.

← Previous Next →